Sales Management 7

Sales Territories

Sales Territories

Customers

Current and Potential

Assigned to a salesperson– Or branch, dealer, distributor

Territory Design Issues

Equity– Salespeople need fair chance to make a living

Coverage– Design to reach all customers– Need tougher “sales” as well as easy customers

Evaluation and control– A way to track effort/success/costs/profits– Can modify plan if not getting desired results

First: Determine # Salespeople

Before you establish territories, decide how many salespeople you need to have.

Then you can divide the market into territories, and assign a territory to each salesperson.

What size sales force?

Need sufficient number of salespeople to cover customers

Salespeople are expensive Balance: Optimal number of salespeople Three methods to establish size:

– Breakdown – Work Load– Incremental

Breakdown Method

It's alright if you love me, ♩♬♪♫It's alright if you don'tI'm not afraid of you runnin' away honey, I’ve got this feeling you won't Say there ain't no use in pretending, ♩♬♪♫Your eyes give you away Something inside you is feeling like I do, We said all there is to say Breakdown, go ahead and give it to me ♩♬♪♫Breakdown, take me through the nightBreakdown, go ahead give it to me, ♩♬♪♫

Breakdown, it's alright, It's alright, it's alright

http://www.youtube.com/watch?v=qNxfPAF1frM

Breakdown Method (the real one)

Divide sales forecast by average salesperson productivity

N = S ÷ P

– N = Number of salespeople needed– S = Total sales volume forecasted– P = Estimated productivity of one salesperson

Work Load Method

Classify customers by category: ABC

Frequency x Length of sales calls/category

Work load to cover entire market

Time available/salesperson

Figure available selling time (1/6 x 2000 Hrs)

Calculate # of salespeople needed

# Sales Calls on Account

Sales/Account

Point of Diminishing Returns

Annoying the Customer

More Calls = More Sales

Incremental Method

Cost/Benefit of adding salespeople

Calculate incremental revenue increase Calculate additional profits Less additional costs

If additional profits > additional costs: hire

Designing Sales Territories

Select Basic Control Unit Estimate potential in each unit Combine units into tentative territories Perform work load analysis Adjust tentative territories

– geography, potential

Assign territories

Select aBasic Control Unit

State Trading area County Metropolitan Statistical Area/Consolidated MSA Zip Code

State

City

New York City

Frostbite Falls, MN

http://www.youtube.com/watch?v=pl7Ww5w2-BI

MSA

Estimate Potential of Territories

Total number of actual and potential customers

Purchase volume/frequency

Remember: potential ≠ forecast– Not everyone who can buy does buy

Form Tentative Territories

Group basic control units into logical territories. Try to group geographically, preferably

contiguously.– Ohio/Pennsylvania: Good– Ohio/Hawaii: Fagedaboudid!

Try to make the territories roughly equal in terms of market potential.

This is a first attempt.

Perform Work Load Analysis

Determine the sales potential for each customer/prospect in the territory.

Determine sales call length & frequency. Add non-selling and travel time. Determine if one salesperson can adequately

service each territory.– Too much work?– Too much time?

Adjust Tentative Territories

If a territory is too large or too small for a salesperson, make adjustments.

Need to balance potential and workload.

Need realistic, and equitable territories to maintain salespeople’s motivation.

Assign Salespeople to Territories

Now look at salespeople’s different abilities. Match abilities to territories. Try to match salesperson with customers and

prospects.– Explorer to uncharted territory– Industry experience

(speaks the language)

Goals– Maximize company revenues and profits– Satisfied salespeople

Good Bye